Leaders February 2019

Growing trust

Post-Brexit business ties with Japan look bright

On 1 February, 2019, the world’s largest free trade agreement came into effect between Japan and the European Union (EU). According to the UK government’s own impact assessment, the EU–Japan Economic Partnership Agreement (EPA) is expected to increase annual exports from the EU to Japan by 45–71% (£22–35bn). In qualitative terms, a Mizuho Research Institute Ltd. senior economist, quoted in Singapore’s The Straits Times, expects “innovation and productivity growth to be sparked by an active exchange of goods, services, capital, people, technology and data in both directions”.

Left out?

In the absence of a negotiated agreement for with­drawal from the EU, British exporters, importers and consumers will find them­selves unable to benefit from the lower prices, increased product choice and enhanced market access that the EPA is expected to bring. Nevertheless, it is hoped that, in its place, Japan and the UK will swiftly ink a bilateral trade agreement.

Negotiations will undoubtedly be robust, but shared values and strong political commitment are a firm foundation from which to improve on the EPA. In that spirit, it is hoped that officials from Tokyo and London will demonstrate skill and vision in satisfying the ambition and interests of both countries, in a way that demonstrates their mutual commitment to maximising shared opportunity.

Shorn of the economic clout that comes from membership of the EU, future UK governments will inevitably need to reassess their portfolio of strategies for achieving policy goals. The use of soft power—the ability to influence through attraction rather than coercion—will surely be of increased importance.

In this respect, the UK is playing to its strengths. A Global Ranking of Soft Power 2018, the most recent edition of an index published by political consultancy Portland PR, Ltd. once again scores the UK as the world’s leading soft power nation. Particular strength comes from the independence of leading cultural and educational institutions, such as the British Council and the BBC World Service, and the iconic brand recognition of British art, music, film, fashion and sport.

Growing trust

For insight into the impact of soft power on the UK’s relationship with Japan, the British Chamber of Commerce in Japan (BCCJ) is indebted to Matt Burney, director of the British Council in Tokyo. At a workshop held this month for BCCJ members, Burney shared the findings of British Council research into the attitudes and perceptions of young people (aged 18–34) towards G20 member countries.

Positively for Japan–UK relations, the Powers of Attraction survey reports that, overall, Japanese trust in the UK’s people, government and institu­tions now exceeds pre-Brexit referendum levels. Although they signalled weaker trust in the imme­diate aftermath of the 2016 vote, Japanese respondents now rate the UK as the second-most-trusted G20 country after Australia.

Comforting for commercial interests, Japanese respondents also rank the UK third, behind the United States and China, as the country with which they intend to do business in the future.

At the BCCJ, we believe that digital and tech­no­lo­gical advancement, socially responsible business and a more diverse and inclusive work­place are themes around which Japanese and British firms can coalesce and share experience, thereby enhancing trust and generating busi­ness opportunities. Trust is born of personal connections and mutual understanding, making fulfil­ment of the BCCJ’s purpose—to bring to our members people who matter—more important and relevant than ever.